tool for diversification and tax exemption

Want to diversify your wealth? Are you looking for an investment that is both sustainable and profitable? Well, why not invest in the forest? In this article, we bring you an overview to learn all about investment in forestry and its many benefits

In recent years, we see that more and more French people want to invest in forests. And they are right, because the forestry sector benefits from a growing market with strong investment potential! You probably didn’t know, but France is the fourth largest European country in terms of Forest.

It is estimated that there are nearly 17 million hectares of forest in France today, representing more than 30% of France’s land area. Given the current environmental situation, these 17 million hectares are precisely the subject of a colossal development policy.

This is evidenced by the average price per hectare of forest, which has almost doubled in 20 years! Therefore, it is not surprising that the forest market has become the new Eldorado for investors…

Keep in mind that investment in forestry can be done in two different ways. You can invest in forest directly or invest through forest management groups.

Invest in a living forest

This first option consists, inter alia, in the purchase of a private forest area from a private owner. You ask me why a private forest domain and not a public one? Well, for the simple and good reason that public forests are under the jurisdiction of the state and they are not for sale.

The only slight downside to direct investment in forestry is that there aren’t many on the market. Moreover, buying forest directly is not always available to all wallets. You should be aware that transactions usually amount to several hundred thousand euros.

Investment in forest through forestry groups

Forestry groups operate in much the same way that SCPI does in real estate. These are management companies that own one or more forest plots, which allow private investors to acquire forest shares. Depending on your goals, you can either invest in woodland group (GFF) either in forest investment group (GFI).

GFFs are more limited insofar as capital is closed from a certain number of subscriptions. GFIs, for their part, have the advantage of being more accessible because they operate on the principle of calls for savings. In both cases, forestry groups allow you to invest in forest at a lower cost because you can invest in it together.

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What are the benefits?

It is true that forests generate income, in particular through the rental of hunting grounds and logging. But you should be aware that when investing in forestry, it is not necessarily the return that matters the most. Medium-surface forests give only 2% of the crop per year. Investors are more interested in the revaluation potential that French forests represent.

According to the forestry of the deposit-consignment fund, the cost of one hectare of forest annually increases by more than 3.5%. And you know what’s even more interesting? This is because the maximum price offered on the market can sometimes be 20 times higher than the minimum price!

So if you are planning to invest in forest very soon, know that it is not too late. According to many experts, prices may even rise in the coming years.

You should know, for example, that by the 2024 Olympic Games in Paris, more than half of the Olympic villages will be built mainly of wood. Thus, we can already expect that French forests will be under extreme stress in the next few years. And as you probably already know, when demand exceeds supply, prices inevitably rise…

What is the taxation?

But in addition to being revalued, investing in forestry is especially valued for its many tax advantages. You may not know this, but buying forest directly or through leshozes allows you to get a tax rebate of up to 18%.

When applying for insurancestorm riskYou can also deduct up to 76% of your contributions from income tax. But the tax exemption scheme offered by the forestry investment doesn’t stop there! Under certain conditions, you can benefit from a tax reduction of up to 75% of the value of the forest when calculating the ISF.

Please note that this 75% tax exemption also applies to inheritance and gift taxes.

Buying a Forest: Good Plan or Bad Plan?

Buying a forest is a good plan or a bad plan

If you’ve been looking for a high-yield crisis haven investment with immediate returns, well, investing in forestry is clearly not for you. This type of investment rather rhymes with “safety” as well as “stability“.

You must keep in mind that investing in forest means investing for a very long time in the hope of realizing the added value during the revaluation. Therefore, we should consider this type of investment more as an asset diversification tool than anything else.

In general, above all people who are highly taxed and want to benefit from better tax exemptions are interested in choosing forest investments….